Hong Kong is a trap, a fake good offshore jurisdiction

[dotbloup]

I can see that several youtubers share their trip to Hong Kong & thanks to their HD cam they make believe it is a paradise land. However, there are many things that people don't say about Hong Kong.
reference:

• Every HK company has to undergo an audit at the end of the financial year. An auditor should be hired on top of the accountant
• The Tax exemption is not automated. Every year, some paperwork should be performed to be allowed to get a 0% corporate tax. This costs a lost of money link / This can cost more than paying taxes or accounting in Cyprus for small businesses.
• If you have a bank outside of Hong Kong you can't use the payment system to pay hong kong government, you have to go through a local company to pay government fees or taxes and usually they ask for 10% commission
• Tax investigation is painful in Hong Kong. They ask everything including Invoices, receipts, bank statements but also.... your personal tax statement. They ask lots of due diligence because if you fail, you have to pay 15,6% corporate tax and that's the goal of the Hong Kong Government. They want you to pay this corporate tax.
• They can seize or freeze your assets in Hong Kong (reference)
• If something goes wrong you have to fly to Hong Kong.

 

[stoddart]

Then go to Seychelles and you're will blacklisted from all.

There are some controls but in final Hong-Kong are not Blacklisted from all and stay a clean place to have an offshore company.

You pay a HK company for do all of papers yearly and it's good.

In this video the guy go to HSBC but HSBC HK don't accept to open account if it's 100% offshore.

 

[JohnLocke]

There are some controls but in final Hong-Kong are not Blacklisted from all and stay a clean place to have an offshore company.

What do you mean by "blacklisted from all" please elaborate ?

 

[dotbloup]

On my first thread, there is a link to the story of a digital nomad who started to have problems with the IRD (HK authority after 18 months of activity.

Plus, i didn't link it but, i have found several people saying that the IRD (Hong kong tax authority) asked for your personal tax statement when you filled out the tax exemption claim. I don't want to link the source because the source is a Hong Kong company that incorporate companies. I don't want people to fall in this trap.

I have discovered that many registered agents of Hong Kong asked for personal tax statement of people who wanted to incorporate a company too.

No jurisdiction in Europe, Seychelles, Belize ask you for such a thing.

By the way i don't talk about blacklist, i talk about local issues with Hong Kong jurisdictions itself.

 

[redeye]

Plus, i didn't link it but, i have found several people saying that the IRD (Hong kong tax authority) asked for your personal tax statement when you filled out the tax exemption claim. I don't want to link the source because the source is a Hong Kong company that incorporate companies. I don't want people to fall in this trap.

On the other hand if you name it here we can see who to avoid in order to not go into this trap as you say! I read your initial post and watched the YT and it really looks like HK is a no go for most small Internet businesses.

 

[dotbloup]

On the other hand if you name it here we can see who to avoid in order to not go into this trap as you say! I read your initial post and watched the YT and it really looks like HK is a no go for most small Internet businesses.

As per your request... Note that this video has been made by a Hong Kong registered agent. For me, it looks like he is shooting himself in the foot

 

[redeye]

Thanks for the share I agree he is totally epic fail and don't know what message he gets out to the public!! idiot

 

[negon]

I don't think he is an idiot, mre over he explain very well what this thread is about, that's HK companies costs a whole lot of money to setup and maintain! AND you are not tax excempted not is it considered to be a real offshore company because they will ask you to pay tax in HK unless you have a very expensive tax adviser there!! It's waste of time and money.

I bet it's the exact same in Singapore which also is a trap!

Thanks for the share

 

[dotbloup]

Thanks for the share I agree he is totally epic fail and don't know what message he gets out to the public!! idiot

People are very naïve about Hong Kong. HK is a just a special region of China... Since it is far away from everything people think they are protected by it is not true. It is exotic so some people just jump on it.

However, if something goes wrong, it really gets bad because they will seize all your company assets in a blink of an eye.

 

[redeye]

However, if something goes wrong, it really gets bad because they will seize all your company assets in a blink of an eye.

yeah I can imagine that this can go very bad for someone that thought his assets were protected and safe

 

[dotbloup]

By the way let me explain, what the man tried to explain in the video.

In Hong Kong, there is no IBC like in Mauritius for instance. In Mauritius, there are two types of companies GBC1 (local) and GBC2 (Offshore not local).
In other words, you have to negociate the exemption of corporate tax with the IRD (the HK tax authorities) every year. If you fail you have to pay 15,6% which is more than a Cypriot corporate tax.
As he said there are 20 questions and they are quite intrusive. The idea behind this questionnaire from the Hong Kong IRD would be to find a weakness in your business in order to refuse the exemption and ask you to pay the corporate tax.

Some people on youtube or other forums like nomadforum talk a lot about Hong Kong. They are happy about hong kong. I know why. Usually you have to pay 17 months after incorporating.
So first you are happy because you didn't pay that much and then, after 1 year and some months... the HK administration rings the bell.

In other words, people who have a HK company for less than 2 years can't really give their opinion about HK companies incorporation.

 

[redeye]

Usually you have to pay 17 months after incorporating.

This is the same in most European countries. You can wait 18 months to file your tax report and pay tax after the company has been established and the first time.

In other words, people who have a HK company for less than 2 years can't really give their opinion about HK companies incorporation.

People tend to be really quick to conclude if a services or like in this case a jurisdiction is good or bad most of based on very vargu research!

 

[dotbloup]

@redeye

Audit:
Actually, in Europe, there is no audit of companies starting from 1 euros of profit. In Hong Kong, every single companies with at least 1 HK dollar has to be audited. The vast majority of HK company discovers it after one year.

If you had lots of transactions during the year, the HK auditor will justify a high price for the audit and for a small business is really expensive. In fact, this can be as high as if you would pay 12,5% corporate tax in Cyprus. I say it so because i know someone who paid $4000 for the audit of his company as he had lots of micro-payments.

In cyprus 2 of the 3 conditions are required to impose a company an audit

(a) its total assets do not exceed € 3.4 million,
(b) its net turnover does not exceed € 7 million,
(c) its average number of employees does not exceed 50 persons.

 

[negon]

If you had lots of transactions during the year, the HK auditor will justify a high price for the audit and for a small business is really expensive. In fact, this can be as high as if you would pay 12,5% corporate tax in Cyprus. I say it so because i know someone who paid $4000 for the audit of his company as he had lots of micro-payments.

I had the same problem in Cyprus in the beginning but we were able to collect all transactions in an Excel sheet and make all of them like 1 transaction that reduce our total fee with several thousand euros.

 

[Dave]

I had the same problem in Cyprus in the beginning but we were able to collect all transactions in an Excel sheet and make all of them like 1 transaction that reduce our total fee with several thousand euros.

I wonder what is the minimum turnover to require the audit in Cyprus?

 

[negon]

You can get a audited report at any time you want it's not a problem. But if it's not required by the tax office in Cyprus why would you like to spend money on it?

 

[Dave]

I thought you were doing audit)

 

[pinacol]

we need audited tax report or no? I'm confused

 

[JohnLocke]

we need audited tax report or no? I'm confused

It's only required if you don't fall into the categories mentioned above by @dotbloup

 

[dotbloup]

Sorry all of that has changed this year (2016). They have changed the Cyprus corporate law

141A - (1) For the purposes of this Law:

(A) "small companies" are companies which, at the date of the balance sheet do not exceed the limits of at least two of the following three criteria:

(I) balance sheet total (total value of the assets without the removal liabilities): € 4,000,000 (four million euros)

(Ii) net turnover € 8.000.000 (eight million euros), and

(iii) average employees during the year: 50 .

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They also changed the section about audit. I don't know if it is now mandatory for small company